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The Principal Financial Well-Being IndexSM - Summary 4th Quarter 2010

This Principal Financial Well-Being IndexSM survey was conducted online within the United States by Harris Interactive on behalf of the Principal Financial Group® between October 20th and October 28th, 2010, among 1,159 employees and 528 retirees. This is one in a series of quarterly studies to identify and track changes in the workplace of small and mid-sized (growing) businesses. The first Principal Financial Well-Being IndexSM survey was conducted in the United States in 2000.

Employees consisted of adults 18+ who work at small and mid-sized (SMB) U.S. businesses (firm size 10-1,000 employees). Retirees consisted of adults age 60+ who reported they are retired or those who are employed part-time or self-employed and have retired from a previous career. Results were weighted as needed for age by gender, education, race/ethnicity, region and household income. Propensity score weighting was also used to adjust for respondents' propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words "margin of error" as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. The data have been weighted to reflect the composition of the entire population of adult employees working for small to midsized U.S. businesses and retirees. Because the sample is based on those who agreed to be invited to participate in the Harris Interactive online research panel, no estimates of theoretical sampling error can be calculated.

Download the Full Report (PDF: 151 KB) - includes all questions and data

Featured Key Findings

  • Holiday Spending:
    • Due to the economy, about two out of five employees (41%) and retirees (39%) indicated they would be spending less per gift this holiday season.
    • Around a third of employees (38%) and retirees (31%) will be scaling back on the number of people for which they buy gifts.
    • About a quarter of employees (22%) and retirees (24%) will be traveling less this holiday season.
    • One in five employees and about a quarter of retirees (24%) will not be a hosting a holiday party this holiday season due to the current economy while a quarter of retirees and nearly one in five employees (18%) will be donating less to charities.
    • About three out of five employees (61%) and retirees (57%) plan to spend the same amount of money as they did last year for the holidays, both up significantly from 4th quarter 2009. Fewer employees (31% compared to 46% in 2009) and fewer retirees (39% compared to 46% in 2009) plan to spend less money than they did last year for the holidays.
    • Three out of five retirees (62%) and employees (60%) plan to spend less than $500 this holiday season.
  • New Year's Financial Resolutions:
    • Similar to 2009, the top two resolutions selected by employees were paying off credit card debt (35%) and putting a set amount of money into savings each month (30%).
    • Retirees' top resolution was to reduce their spending by a specific amount each month (19%) followed closely by pay off credit card debt (17%) and put a set amount of money into savings each month (15%).
  • Rebuilding Financial Well Being:
    • Employees and retirees have taken many steps to improve or rebuild their financial well being since the recession began:
      • 57% of employees and 64% of retirees have spent less money.
      • Half of employees and 37% of retirees have paid down debt.
      • 24% of employees and 15% of retirees have increased savings for an emergency fund.
      • Nearly one in five employees (18%) said they have increased their retirement savings.
    • Top priorities for employees as they attempt to rebuild their financial well being include living within their means (62%), having an emergency fund (46%), putting a budget together and sticking to it (35%) and protecting their nest egg (23%).
  • Economic Perceptions:
    • Half of employees and two thirds of retirees (67%) said they do not feel better off financially now than they did at the beginning of the year.
    • Approximately a third of both employees (38%) and retirees (33%) described their sentiment about the economy and their ability to rebuild their finances as "cautious." Around a quarter of employees (29%, up significantly from 21% in 3rd quarter 2010) and retirees (24%, up significantly from 12% in 3rd quarter 2010) is "optimistic."
    • Respondents are divided on which political party they think will work the hardest toward improving the financial well being of Americans in 2011. At least a quarter of both groups (31% of employees; 25% of retirees) believe neither party will work toward improving the financial well being of Americans.
    • In thinking about issues of concern in the New Year, employees and retirees are most concerned about health care costs (65% of employees; 71% of retirees), economic uncertainty (59% of employees; 60% of retirees) and increased taxes (51% of employees; 55% of retirees).
  • Economy's Impact on Spending:
    • Three out of five employees and over half of retirees (55%) have reduced their spending to some degree in the past two months due to the economy.
    • Though the majority of respondents still intend to continue their reduced spending in the future regardless of economic conditions, the percentage is down significantly from 3rd quarter 2010 for both employees (74%, down from 84%) and retirees (71%, down from 84%).
    • Half of retirees and 55% of employees are preparing more meals at home instead of eating out.
    • 47% of employees (up significantly from 34% in 4th quarter 2009) are bringing their lunch to work.
    • Two out of five employees and almost half of retirees (47%) are lowering the thermostat at home.
    • A quarter of employees (28%) and a third of retirees (35%) are shopping in their own closets.
  • Health Care Reform:
    • Two thirds of employees (65%) and half of retirees (53%) believe health care reform will have a direct impact on their personal health insurance costs.
    • Three out of five employees and about three quarters of retirees (73%) who think their costs will be impacted expect their costs to rise significantly. The majority (86% of employees; 89% of retirees) think their costs will go up to some degree.
    • Nearly one out of five employees (19%) and retirees (18%) has experienced some negative changes to their health insurance due to health care reform.
  • Future of Social Security:
    • 43% of employees and 45% of retirees are either very or extremely concerned about the future of Social Security.
    • Social Security is the primary source of income for about a third of retirees (32%).
    • 18% of retirees indicated that 100% of their retirement income is coming from Social Security, up significantly from 11% in 4th quarter 2007.
  • 401(k) Changes:
    • 85% of eligible employees are participating in a defined contribution plan, up significantly from 81% in 4th quarter 2009.
    • Nearly one in five employees (18%) have actually increased the amount they are contributing to their 401(k) account in the last six months due to current economic conditions, up from 13% in 4th quarter 2009.
  • Job Security - Job security continues to top the importance chart when compared to long-term financial future and challenging work.
  • Employee Benefits - Employees continue to rate health insurance as the most important benefit, followed by defined contribution retirement plans and dental insurance. Health insurance is the benefit most employees would like to see improved, while defined benefit plans is the benefit most employees would like to see their employer offer.

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